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Strategies & Market Trends : Value Investing

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E_K_S

To: E_K_S who wrote (56241)	11/20/2015 7:27:38 AM
From: Spekulatius	1 Recommendation of 79147

I am not sure about the value of SUNE's assets. It seems to me that they depend on cheap wholesale financing to keep their business going. If they can't raise debt to replace their warehouse loans, they will basically have to cease new business activity and go in runoff (best case) or default right away because cash flowing out the door exceeds cash coming in and they can't reduce the cash outflows quick enough (more likely). Thiis is all speculation on my part, I have not done an deep dive into this. What I do know is that when bonds start to trade below 50c on the dollar, it's a waste of time to look at buying the equity, since the bonds are senior and offering equity like returns at this point, with lower risk and better recovery.

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